Medicare Advantage members soon will feel direct effects from the new health care law. This fall they may need to shift their coverage, and they should begin preparing now.
Medicare Advantage plans are run by private insurers. The insurers receive a fixed amount per member from Medicare, and the payment is higher than the cost of traditional Medicare. The plans generally provide more coverage than traditional Medicare, such as prescription drugs coverage, and often charge lower deductibles and copayments.
In the new health care law, the reimbursements to Medicare Advantage plans are reduced to help pay for other parts of the law. The 2011 reimbursements will be the same as the 2010 rates, while medical costs are rising. Plus, more significant reductions in Medicare Advantage reimbursements are scheduled for the rest of the decade.
The insurers have submitted to the government for review their bids for next year’s Medicare Advantage plans. Consultants who helped prepare the bids have told the media the insurers plan to make up for the lower reimbursements by reducing coverage and increasing costs for a range of services. Likely changes are reduced vision, dental, and prescription drug benefits. Other likely changes are elimination of free teeth cleaning and gym memberships, and higher fees for hearing aids, eye glasses, and emergency room visits.
The government probably will push back against some of the changes and expect insurers to revise their bids. But it’s unclear how much the insurers will change their bids, and the debate will be over how much they should reduce their services and increase costs to members. I suspect at least a few insurers will withdraw from the Advantage market in the next few years. Others will change terms so the plans are more comparable to traditional Medicare.
You need to be prepared for a combination of higher costs and lower benefits under Medicare Advantage plans. Begin building some flexibility in your spending plans. Also, start thinking which medical plan features are more important to you and how much you are willing to pay for them. You also should be prepared to revisit the choice of a Medicare Advantage plan instead of traditional Medicare. With traditional Medicare you’ll also have to evaluate Medicare Supplement (Medigap) plans and Part D prescription drug coverage.
Open enrollment season starts November 15. Before then you should be able to compare plans in your area on the Medicare web site or by calling Medicare. You’ll have six weeks to make a decision starting in November, so do some preliminary thinking and planning now.
RW August 2010
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